Multiemployer pension funding has reached record levels—but contractors need to understand what “100% funded” really means.
There is encouraging news for employers participating in multiemployer pension plans. Milliman’s latest study estimates that U.S. multiemployer pension plans were 106% funded in the aggregate as of June 30, 2026, up from 103% at the end of 2025 and the highest level recorded since Milliman began the study in 2007.
That is good news for the overall health of the multiemployer pension system. But it can also create a potentially costly misunderstanding for signatory contractors:
A pension plan reporting that it is 100% funded—or even more than 100% funded—does not automatically mean a contractor has zero withdrawal liability.
Why Doesn’t 100% Funded Automatically Mean Zero Withdrawal Liability?
The confusion comes from the fact that “funded percentage” and “withdrawal liability” are related, but they are not necessarily calculated the same way.
Under ERISA, withdrawal liability is generally based on a withdrawing employer’s allocated share of a pension plan’s unfunded vested benefits (UVBs). Pension Benefit Guaranty Corporation (PBGC) explains that the amount can depend on the valuation date, actuarial assumptions and methods used to value benefits and assets, and the allocation method used by the plan.
That means the funding percentage a contractor sees in a pension fund report, annual funding notice or presentation may not be the number used to determine the contractor’s withdrawal liability exposure.
For example, a pension fund could report itself as 100% or better funded using its funding assumptions, while a separate withdrawal-liability valuation using different permissible actuarial assumptions could produce unfunded vested benefits. PBGC has long recognized that withdrawal-liability assumptions do not necessarily have to be the same assumptions used for pension funding purposes.
Think of It as Two Different Questions
Pension funding asks:
Does the plan have sufficient assets, under the applicable funding assumptions, to meet its obligations?
Withdrawal liability asks:
If this employer withdraws, does the plan have unfunded vested benefits for withdrawal-liability purposes, and if so, what portion is allocable to this employer?
Those questions can produce different answers.
Can Withdrawal Liability Actually Reach Zero?
Yes.
If the pension plan has no unfunded vested benefits under the valuation and allocation methodology applicable to withdrawal liability, an employer generally would not have ordinary withdrawal liability based on UVBs at that point. PBGC has specifically recognized that where plan assets exceed vested liabilities for these purposes, there are no unfunded vested benefits to allocate.
But contractors should not substitute a plan’s headline funded percentage for that determination.
100% funded on a funding report does not necessarily equal $0 withdrawal liability.
The number a contractor needs is its current estimated withdrawal liability, calculated by the fund under the applicable withdrawal-liability rules.
Timing Matters Too
Withdrawal liability generally looks to the plan’s unfunded vested benefits as of a statutory measurement date associated with the withdrawal. As a result, today’s improved investment performance or current funded percentage may not immediately translate into the number applicable to a contractor’s withdrawal.
There is another important recent development. In May 2026, the U.S. Supreme Court unanimously held in M & K Employee Solutions, LLC v. Trustees of the IAM National Pension Fund that ERISA does not require the actuarial assumptions underlying a withdrawal-liability calculation to have been selected on or before the statutory measurement date. The decision reinforces why contractors should not attempt to calculate their exposure from a published funding percentage alone.
Construction Contractors Have Another Important Rule
Construction employers also have special withdrawal rules under ERISA. For qualifying building and construction industry employers, simply ending a contribution obligation does not necessarily create a complete withdrawal in the same manner as it would for employers in many other industries. Special rules determine when a construction employer actually experiences a withdrawal.
That makes the analysis particularly important for FCA contractors considering:
- Closing or selling a business
- Leaving a bargaining relationship
- Changing corporate structure
- Moving work between related companies
- Subcontracting work previously performed by bargaining-unit employees
- Continuing similar work nonunion
- Reducing operations or contributions significantly
The facts surrounding the transaction or business decision can be just as important as the pension fund’s funded percentage.
What Should Contractors Do?
The improvement in pension funding is encouraging, and a healthier pension fund can ultimately reduce withdrawal-liability exposure. But contractors should never assume that a fund reaching 100% funded means their withdrawal liability has disappeared.
Before making a significant business decision, request a current withdrawal-liability estimate from the pension fund and determine:
- What is our estimated withdrawal liability today?
Do not rely solely on the fund’s published funded percentage. - What assumptions and valuation date are being used?
Understand whether the number being discussed is a funding valuation or a withdrawal-liability valuation. - Does the construction-industry exception apply to our situation?
The answer can depend heavily on what the contractor intends to do after contributions cease. - Could the transaction itself trigger withdrawal liability?
A sale, closure, restructuring or change in operations should be reviewed before—not after—it occurs.
This information is intended for general educational purposes and is not legal, actuarial or financial advice. Withdrawal-liability calculations and construction-industry exceptions are highly fact-and plan-specific. Contractors considering a sale, restructuring, cessation of contributions or other significant change should consult qualified ERISA counsel and appropriate pension professionals.